Tuesday, September 28, 2010

Cuba ups gasoline prices about 10 percent

Posted on Monday, 09.27.10
Cuba ups gasoline prices about 10 percent
Associated Press Writer

HAVANA -- Cuba has upped already-high gasoline prices by about 10
percent amid sweeping changes to the economy, a move that could lead to
grumbling among cash-strapped islanders, particularly private taxi
drivers who are not allowed to raise their own prices.

The changes, which took effect Monday, were announced in the Communist
Party-newspaper Granma, which cited rising international prices for the
move. It was the first time prices have risen since September 2008, when
crude oil internationally sold for about a third more than it does now.

The cost of diesel fuel - used by many of the old cars that populate
Cuba's streets - rose to $1.19 a liter ($4.50 a gallon), about 11 cents
a liter (42 cents a gallon) higher than previously. The highest octane
fuel rose even more to $1.73 a liter ($6.54 a gallon), from $1.51 a
liter ($5.72 a gallon).

The prices approach those paid in Europe and are apparently the highest
in the hemisphere, topping pump prices in Brazil and Bermuda. They are a
fortune for Cubans who make the average salary of just $20 a month.

But the changes are not likely to affect many islanders, a reason why
past gas hikes here have not led to unrest, as they sometimes do in
other developing countries.

Few people on the island own a car, and those lucky enough to have been
issued a vehicle through their state-run companies usually have a
monthly quota of gas paid through work.

The government heavily subsidizes the public transportation system on
which most Cubans rely, and it did not announce an increase in those prices.

Those who will take a hit are the thousands of private taxi drivers who
use gas-guzzling American clunkers from the 1950s or rusting cars from
former Eastern Bloc countries to ferry people along set routes to and
from work.

In most cases, the price they charge is set at 10 pesos (about 50
cents). Even before the price hikes, many complained that high fuel
costs meant it didn't pay to cruise the city looking for a fare.

Taxi drivers interviewed Monday said it would be even harder for them to
make ends meet if the government does not authorize higher fares,
particularly since they already pay a steep price for permission to drive.

"I already work just to pay the license fees," said Alexander Rodriguez,
a 39-year-old taxi driver waiting for a fare at a taxi stand in Old
Havana. He said he must pay the government 300 Cuban pesos a month -
about $15 - for the right to take passengers in his cherry-red 1955
Oldsmobile. "For a Cuban, this price hike is really tough."

The gas price hikes come as the government is seeking to transform its
socialist economy into a system that includes more private workers and
more reliance on prices to regulate supply and demand. Earlier this
month, Cuba announced it was laying off half a million workers - about
one-tenth of the work force - while allowing far more free enterprise.

On Friday, the government approved some 178 private business activities,
gave Cubans the right to employ people not related to them, and even
promised credit to entrepreneurs.

Among the new activities authorized by the government is the sale of
fruits and vegetables from roadside kiosks or homes, something many had
already done on the black market. On Monday, the government gave more
details of how the legal stands will work, saying a pilot program
allowing the stands in a few provinces will be expanded nationwide.

Those interested must register and pay taxes starting at 25 percent on
any profits, according to an article in Granma.

"The idea is to give order to what had been a raging river," the article
said, referring to the widespread illegal vegetable stands that have
existed until now.


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